Cutoff price for luxury home differs by region

A new survey suggests the point at which an expensive home becomes a luxury home differs by region:

But the starting point for making such a judgment, the price, seems to vary significantly by region. The price tag for a luxury home is perceived to start at $1 million in the Northeastern, Pacific and mountain states (Montana, Colorado, Utah, et al.). But in the Midwest and South, consumers’ notions of luxury begins at $500,000, according to a survey by

By the way, sales of those million-dollar homes are doing rather well nationally, but a major player in homebuilding is taking an unexpected turn — one that speaks of the real estate world of long ago.

D.R. Horton Inc. is rolling out a new division that plans to appeal to the bare-bones, nothin’ fancy, first-time buyer. Its Express Homes line, to be built initially in Southern and Western states, will range from $120,000 to $150,000. And what you’ll see at these developments is what you’ll get — there won’t be any upgraded features, no optional finishes.

Horton CEO Donald Tomnitz told the Fort Worth Star-Telegram that the company believes the next segment of the real estate market recovery will be led by entry-level buyers, presumably older ones.

The regional differences in price could be due to a variety of factors. It might be linked to relative income levels. It could be tied to housing inventory – less room might lead to higher prices overall. Or, there might be differences in home styles and expectations. The mountain states seem to stick out in amongst these regions as they often have plenty of space and prices aren’t as high as the Northeast or Pacific Coast. However, perhaps there are plenty of luxury mountain homes, whether they are vacation or resort homes.

It would be interesting to know exactly in which markets D.R. Horton intends to build these cheaper homes. Given the need for affordable housing in many areas of the United States plus the need for more good housing at the bottom end of the market, I imagine there could be a market for such homes. Yet, these homes probably can’t be built everywhere as neighbors in more expensive homes would view cheaper homes as threats to their property values.

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